Earnings Reports for July 17

Bank of America in Line With Estimates

Bank of America Corp. met Wall Street’s expectations with second-quarter earnings of $1.23 per share, up 7 percent over its operating earnings of $1.15 per share a year ago.

With more than 4,500 branches in 21 states, Bank of America serves more than 30 million households and 2 million businesses.

Net income for the nation’s second-largest bank was $2.06 billion, essentially unchanged from operating earnings a year earlier. Net income in the same quarter last year was $1.92 billion, or $1.07 per share, including a $145 million after-tax merger-related charge.

Consumer and Commercial Banking, which serves individuals and businesses with annual sales of up to $500 million, earned $1.25 billion and had a return on equity of 21 percent. This segment represented 61 percent of the company’s net income.

Those gains were offset by slower capital markets activity and depreciation in venture capital investments due to lower stock prices.

The return on common equity in the latest quarter was 17.63 percent, basically unchanged from a year earlier, and the return on assets was 1.23 percent.

Mutual fund assets rose by $12 billion, or 14 percent, during the first six months of the year. In addition, the company agreed to acquire the remaining 50 percent of Marsico Capital Management LLC, an investment management firm which manages more than $15 billion in assets.

Card revenue rose 13 percent and consumer investment and brokerage revenue grew 16 percent. Trading revenue was up 19 percent and corporate banking service revenue rose 9 percent.

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Corning Sees Earnings Soar

Corning Inc. reported second-quarter earnings were up 80 percent from a year earlier, surpassing Wall Street expectations.

The company said growth was driven by strong sales of fiber optical cable and flat-panel display glass.

The company said second-quarter pro forma earnings reached $271.1 million, or 94 cents a share, compared with $136.5 million, or 52 cents per share, in the same quarter of 1999.

Wall Street had expected Corning to earn 80 cents a share, according to research firm First Call/Thomson Financial.

The pro forma net income excludes amortization of purchased intangibles and goodwill, in-process research and development, one-time acquisition costs, discontinued operations and other nonrecurring items.

The company boosted its outlook for full-year pro forma earnings to between $3.15 and $3.25 a share, about 60 percent above the year-earlier $2 a share. Analysts have forecast earnings of $2.92 a share.

“This revised outlook reflects our very strong performance this quarter and confidence for continued unprecedented demand for Corning’s market-leading products through year-end,” said Roger Ackerman, Corning’s chairman and chief executive officer. BACK TO TOP

Profits Improve at Delphi Automotive

Delphi Automotive Systems said that its second quarter earnings totaled $424 million, a 7.6 percent increase over last year’s results.

The earnings of 75 cents per share matched Wall Street expectations, according to a survey by First Call/Thomson Financial. In the second quarter of 1999, Delphi earned $394 million or 70 cents a share.

The world’s largest auto parts supplier said it had sales of $7.8 billion in the quarter, an increase of one percent over the second quarter of 1999. The former parts arm of General Motors Corp. said sales to GM and its affiliates declined by $394 million, while sales to other customers increased $489 million.

The company said cost reductions were a major factor in improving profits.

Its mobile multimedia division had revenues of $58 million, up from $8 million in the sames quarter last year. Delphi has set its sights on in-car technology as a growth business, and expects about $200 million in revenue from the division this year.

Delphi, based in the Detroit suburb of Troy, employs about 216,000 workers in 39 countries.

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Global Banking Boosts FleetBoston

FleetBoston Financial said second-quarter net earnings increased 26 percent over the same period last year, powered by a strong increase in its global banking and financial services business. “We had a strong quarter,” said FleetBoston spokesman James Mahoney. “We experienced strong revenue growth and saw the completion of the bulk of the Fleet-BankBoston merger conversions.”

FleetBoston reported net earnings of $847 million, or 91 cents per share, for the three-month period ending June 30, compared with $700 million, or 72 cents per share, in the same period last year.

Operating earnings rose 15 percent, to $772 million, or 83 cents per share, for the quarter, an increase from the $700 million, or 72 cents per share, for the same period a year ago.

The 83 cents per share figure beat Wall Street expectations of 82 cents per share.

Revenues for the period were $3.73 billion, slightly higher than the $3.45 billion the company reported for the quarter a year ago. That included $75 million after taxes for the sale of deposits and loans to Sovereign Bank, a requirement of the Fleet-BankBoston merger.

Fleet has posted earnings of $1.58 billion for the first six months of the year, compared with $1.38 billion in the first six months of 1999.

That includes the expense of Fleet’s merger with BankBoston, and the divestment of $3.6 billion worth of loans and $4 billion in deposits to meet government requirements for the merger.

The company said the growth of non-interest income, such as fees, as a percentage of overall income offset merger costs and divestment in loans and deposits. That $2 billion in non-interest income was 55 percent of total revenues in the second quarter.

Fleet saw strong growth in its global banking and financial services sector. That part of the business reported second-quarter earnings of $460 million, 44 percent higher than a year ago.

The company also reported strong growth in its commercial and retail banking business, which saw earnings of $328 million, an increase of 28 percent from the same period last year.

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Profits Up at Genentech

Biotechnology firm Genentech Inc. reported a 7 percent gain in second-quarter profits, meeting Wall Street estimates, amid stronger sales of its cancer medicines.

The biotech bellwether said its income rose to $78.2 million, or 29 cents a share, from $73.2 million, or 27 cents, in the year-ago quarter. Wall Street analysts had expected the company to earn 29 cents a share, according to First Call/Thomson Financial.

Revenues for the quarter rose 10 percent to $413.6 million, driven primarily by sales of breast cancer drug Herceptin and Rituxan for non-Hodgkin’s lymphoma. Sales were also lifted by gains on the sale of certain marketable equity securities.

Second-quarter sales of Herceptin increased 44 percent to $66.7 million compared to $46.2 million in the second quarter of 1999. Sales of Rituxan increased 38 percent to $102.8 million from $74.4 million in the second quarter of 1999.

The quarterly profit increase was before the ongoing impact of the redemption of Genentech’s special common stock and related accounting treatment. As a result of the redemption-related charges, the company recorded a net loss for the second quarter of $14.2 million, or a net loss per share of 5 cents. The company recorded a net loss of $923.2 million or $3.59 per share for the second quarter of 1999.

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The Purchase N.Y.-based company, which controls more than half of the U.S. snack-chip market and about 30 percent of the soft drink market, said profits rose to $563 million, or 38 cents per share. That’s up from $467 million, or 31 cents a share, in the same period a year earlier.

Analysts polled by First Call/Thomson Financial had expected the maker of Frito-Lay snacks and Tropicana juices as well as Pepsi and Mountain Dew, to earn 36 cents a share.

Second-quarter revenue rose nearly 9 percent, to $4.9 billion from $4.5 billion in the year-earlier quarter.

Second-quarter profits soared 27 percent at Pepsico’s Frito-Lay International unit, led by strong performances in Mexico and the United Kingdom and a successful “Pokémon” promotion across Latin America.

Double-digit volume growth in Cheetos, Tostitos and Ruffles snacks fuelled revenue growth of 7 percent, to $2 billion, at Frito-Lay North America. Volume was 5 percent higher, reflecting solid growth in potato chips and variety packs and the success of new products, especially Ruffles Flavor Rush and Frito-Lay Snack Kits.

Pepsico’s Tropicana Pure Premium juice unit posted double-digit volume growth in the quarter, and operating profit gained 17 percent to $51 million. Tropicana benefited from lower ingredient costs, while higher volume improved manufacturing efficiency.

Bottler case sales in North America were flat in the quarter, reflecting a modest decline in concentrate brands and a strong gain by non-carbonated brands, especially Aquafina.

Overseas, double-digit volume gains in China, India, Thailand, Germany and Japan.

“We believe our commitment to innovation and our unparalleled distribution capability can drive consistent double-digit earnings per share growth in the second half of 2000 and beyond,” said Roger Enrico, the company’s chairman and chief executive.

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The Associated Press and Reuters contributed to this report.